MEPs issue deadline on budget safeguards

Date: 09/04/1998

By Rory Watson

MEPS have given the European Commission a six-month deadline for imposing tougher safeguards to protect the EU's budget from fraudsters and prevent taxpayers' money being wasted.

If Budget Commissioner Erkki Liikanen and his colleagues fail to convince Euro MPs by September that they have introduced effective controls on spending on a range of internal and external policies, they will face a politically embarrassing rebuff from the European Parliament.

Unless MEPs are satisfied by the Commission's reponse in the months ahead, they are likely to refuse to endorse its handling of the Union's 1996 budget.

Their approval is required under the EU's treaties. Some parliamentarians claim that such a response would be equivalent to a vote of censure against the Commission, which would then be honour-bound to resign.

British Conservative MEP James Elles, who successfully persuaded the Parliament not to endorse the budgetary discharge procedure last week and to impose the six-month deadline, insists that issues of fundamental importance to Union citizens are at stake.

"The issue is whether the EU taxpayer's money is being spent as economically and effectively as possible, and whether all steps are being taken to minimise the risk of fraud and corruption," he said in his report on the 1996 budget.

The Parliament's initial view is that these conditions are not being met. A highly critical resolution approved last week expressed MEPs' deep concern "about the many problems in nearly all categories of the budget, amounting to an unacceptable number of cases where the execution of the budget has been inappropriate".

One of the most crucial of these, from the Parliament's point of view, is the Commission's failure to implement MEPs' recommendations for plugging financial loopholes in the transit system, which result in millions of ecu of taxpayers' money being lost through fraud every year.

Anger is focusing primarily on delays in putting into place a computerised system to replace the current paper-based one. MEPs warned that tackling these defects was "the issue on which the final decision to grant or refuse discharge could hang".

Replying to the parliamentarians' concerns, Liikanen confirmed that a complete report would be ready for September, but predicted that the scheme would involve just five member states, rather than all 15, by the end of next year.

MEPs are also determined to use their budgetary powers to press for the Commission's own anti-fraud squad, UCLAF, to be given a wider remit. They will also demand that the Parliament be provided with regular lists of all internal investigations being carried out by the Commission into allegations of fraud or corruption by EU officials.

Agricultural expenditure is a major area where improvements need to be made, according to MEPs. They criticised the Commission for delays in introducing an integrated control system designed to prevent fraud in the payment of agricultural subsidies.

Figures supplied by the Commission indicate the scale of the task facing the 50 officials involved in checking the applications for 37 billion ecu of aid each year.

In 1996, there were more than 3 million requests for aid, of which some 250,000 were checked on the spot. One-third were found to be incorrect, and in 12% of the cases the applicants had overdeclared the land eligible for assistance by more than 20%.

MEPs are now demanding a breakdown from the Commission of the number of checks per member state. They are also pressing for major improvements in the way EU aid is spent in the Mediterranean, central and eastern Europe, and the former Soviet Union.

Liikanen has already promised that the answers will be ready, and many improvements in place, by September.

He also pointed out that the Court of Auditors had endorsed the 1996 budget as a faithful reflection of the Union's income and expenditure, adding that where there were errors in the payments made, the auditors attributed 90% of these to member states.